View more on these topics

Platforum: How big brands are tackling the robo-advice threat


There is no doubt the robo-adviser tagline is getting plenty of airtime even if no one likes it very much. Both bits seem to cause offence: “robo” because there is scepticism that machine can replace human and “adviser” because they do not provide advice in the formal sense.

“Discretionary direct” may be the jargon some insist on but perhaps this is just a case of the financial services industry getting tied up in semantics and reacting defensively to something new and disruptive.

Let’s try and get beyond the hype and figure out what all the fuss is about and for whom this is an opportunity.

Robo-advisers are on the march on both sides of the Atlantic. US automated investment service Wealthfront’s assets have reached $2.4bn and while the size of the overall market is only in the tens of billions, growth rate is rapid and there are at least a dozen services already live.

Most offer something very similar to MarketRiders’s original concept launched back in 2008 with modern portfolio theory powered asset allocation, delivered via ETFs with regular rebalancing.

In the UK, there is just as much interest but the focus is predominantly on Money on Toast, which is a simplified advice proposition, and Nutmeg, which follows the US model.

The industry really started to take Nutmeg seriously when Schroders took an investment stake 12 months ago. Aberdeen immediately admitted it had wanted to invest as well suggesting the big brands were not going to let the start-ups run away with the idea. For me, the most interesting thing will be to what extent the investment industry, populated with well-trusted brands, will be usurped by new entrants.

The big brand response has begun in the US led by Vanguard, Charles Schwab and Fidelity. Vanguard Personal Advisor Services is an ultra-low cost online advice proposition for clients with $50,000, which will cost 0.3 per cent all in. Charles Schwab launched its Schwab Intelligent Portfolios in March, which is an automated service for clients with as little as $5,000. It does not charge anything for advice or the platform, just the fund management charges. Fidelity has a partnership with Betterment, which provides a white label version of its platform to financial advisers.

In the UK, we are seeing signs of life in simplified advice from the likes of Parmenion-powered Wealth Horizon and the FCA’s Project Innovate is said to be inundated with this type of discretionary direct propositions.

We are also seeing the big brands breaking the surface here too. Investec Wealth & Investments will launch a discretionary direct service called Click and Invest and Brewin Dolphin is said to be considering its options in this area having removed the distraction of its execution-only Stocktrade that it sold to Alliance Trust last month.

Perhaps most significantly Hargreaves Lansdown declared its hand last week by launching HL Portfolio+. These are six ready-made portfolios with twice-yearly rebalancing that carry no charges over the standard platform fee and fund management costs. However, they add up to as much as 1.9 per cent so this is hardly a low cost option even if it ticks the convenience box.

What Hargreaves Lansdown has been successful building is a range of guided solutions based around the popular Wealth 150 list of recommended funds. Its rapidly expanding range of multi-manager funds (made up predominantly of Wealth 150 funds) is now joined by the HL Portfolio+ range (made up of HL multi-manager funds predominantly made up of – you guessed it – Wealth 150 funds). This is an impressive case study in levering a strong brand to take control of more of the value chain: platform, own brand funds and now a bit of investment management.

Those who write off robo-advisers on the basis of their currently modest share of assets are missing the potential they have to appeal to consumers at the heart of the advice gap. Their growth rate in the US points to this.

However, the US examples will not be replicated exactly in the UK, partly because of a different regulatory environment and partly because the MarketRiders model is not the only way to skin this cat.

The big brands need to respond to the genuine forces driving the hype: online, automated, low cost and convenient. However, the primary challenges for start-ups are customer acquisition and trust, which are much easier to deliver with a strong brand. Here the big names have a distinct advantage notwithstanding that Nutmeg has impressively established a beachhead. If we are heading for an outright battle it will most likely turn into the asymmetric warfare of the nimble guerrilla against the mighty establishment, which will be protracted and there will be casualties.

Mitch Tuchman who founded MarketRiders and now runs another of the US robo-advisers, Rebalance IRA, will be presenting at the Platforum D2C Conference on 24 June. For more information please visit:

Jeremy Fawcett is head of direct at Platforum


danny cox 700x450

Hargreaves Lansdown unveils ‘third way’ non-advised service

Hargreaves Lansdown has unveiled the details for its newly launched non-advised service Portfolio +. The “third way” proposition provides investors with ready-made portfolios managed and rebalanced every six months by the HL investment research team. There are six portfolios to choose from, ranging from Adventurous Income to Conservative Growth. When choosing a portfolio investors can select their […]


Ready-made portfolios risky and expensive, advisers warn

Model portfolios focused on attracting non-advised clients could be risky and expensive, advisers warn. Non-advised giant Hargreaves Lansdown recently launched its “third way” proposition, Portfolio +, which provides investors with six ready-made portfolios ranging from Adventurous Income to Conservative Growth. Portfolio + investors pay the ongoing charges of the underlying funds, ranging from 1.34 per cent to […]


Aviva launches D2C platform

Aviva has launched a direct-to-consumer platform including an Isa, Sipp and general investment account. Customers will be able to manage their savings, investments and pensions in one place, including buying, selling and switching investments. Annuities can be bought direct but not through the new platform. An Aviva spokeswoman says: “Aviva’s consumer platform is now open […]


FinaMetrica to launch ‘robo advice’ tool

FinaMetrica is developing its risk profiling tool into a “robo advice package”. FinaMetrica currently offers a risk profiling questionnaire for advisers in the UK. It plans to launch a 19-question investor profiling tool, which includes a psychometric risk test as well as covering time horizon, capacity for loss, investment knowledge and experience. The tool is aimed at […]

Guide cover

Guide: how to… communicate with your pension members

Effective communication of your pension scheme is a large part of getting auto-enrolment right. Delivering the same message to all employees is not necessarily the way to go. To assist you with the communication of your pension scheme, we have provided some key areas to think about, such as:

  • What to consider when segmenting your workforce
  • How to communicate to pension scheme members at the right time in their member lifecycle
  • What topics you should be discussing with your pension members
  • The new pension freedoms and the importance of communicating them


News and expert analysis straight to your inbox

Sign up


There are 3 comments at the moment, we would love to hear your opinion too.

  1. vaughan jenkins 15th June 2015 at 1:38 pm

    We are tending to see me-too execution-only DFM propositions or pre-packed mutual fund platforms rather than innovative solutions for the mass affluent. Cloning failure in the HNW market is unlikely to be successful. A fundamental re-think of the user experience is required to engage wider customer segments with a different approach to goal-based investing – see

  2. Anthony Morrow 15th June 2015 at 3:27 pm

    Talking of skinning cats, the content of this article suggests that there a million ways in which to say the same things over and over again and for the same people in the industry to be saying them.

  3. To my mind, none of these are actually Robo Advice, simply because there is no advice involved, its simply DFM portfolios, which in reality are little different to the traditional mixed asset funds.

    Robo Advice would actually be something completely different, because an analysis would be performed (however basic or complicated) and a recommendation for a product and fund choices (if appropriate would be made). How you would go about achieving such a thing, is a different matter entirely

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm